Within the world of health care economics, the United States “for-profit” health care system, strife with inflated costs and barriers to access, is in a process of reform. Rising insurance premiums, capitation, and market competition that discourage the consumption of unnecessary services currently reward providers for their focus on acute, episodic treatments, rather than encouraging improved health outcomes or disease prevention. The supplier-induced market has forced medical providers to base treatment recommendations on economic necessity. Complex billing and insurance operations have caused administrative costs to skyrocket. The Affordable Care Act (ACA) aims to correct these inefficiencies by reducing personal health care costs, improving community health, and increasing access to quality care. The following discussion will examine the interplay of capital resources, Meaningful Use, and financial incentives within the world of health care economics and system reform.
Capital resources refer to assets used by a health care organization that facilitate the delivery of services. As the United States’ health care system evolves from an institution dependent on the acquisition of revenues from hospital admissions and procedures to one focused on managing health and wellness, the careful utilization and deployment of capital resources is critical to economic growth. Computer programs are a beneficial capital resource that supports the practice of medicine, such as computerized order entry or clinical decision support systems. For example, a computerized order entry system reduces the duplication of diagnostic testing while clinical decision support systems help providers manage chronic conditions. Industry experts agree the adoption of health care information technology (HIT) is necessary for improving quality and efficiency, although, as of 2006, only 12% of physicians and 11% of hospitals invested in technological improvements to their capital resources (Congress, 2008).
Meaningful Use refers to standards of quality demonstrated when using electronic health records (EHR) to deliver services. Traditionally, quality improvement initiatives evaluated services on a case-by-case basis; for example, was a procedure performed properly, were there complications, was the patient satisfied, and was the provider properly trained? The ACA’s movement towards health care reform expands the focus on reducing individual errors to addressing system performance and community health. Through data capture and sharing, health care organizations gain the ability to use this information to analyze and advance clinical processes. For instance, through the aggregation of real-time patient data early warning systems can reduce medical emergencies, transitions to intensive care, and mortality rates. Even though the ACA does not mandate the adoption and Meaningful Use of EHRs, after 2015, all Medicare providers not participating in the EHR incentive program may be subject to financial penalties (Impact, 2012).
Financial incentives refer to monetary rewards and penalties offered to health providers for creating a stronger primary care system that expands access, provides improved quality, and delivers better health results. Under the current fee-for-service system, providers do not receive payments for time spent with a patient discussing medical histories, alternative treatment options, concerns, between visit follow-ups, or even care coordination and management; instead, reimbursements occur through procedures, such as surgeries or diagnostic testing. Under ACA, primary care physicians receive a temporary increase in both Medicare and Medicaid payments. Financial incentives are also available for providers who encourage their patients to obtain preventative care services and for patients, through the elimination of coinsurance, deductibles, and copayments for approved preventative services and tests, such as blood pressure and cancer screenings. Moreover, the ACA Medicaid expansion will provide over 32 million people with health coverage, resulting in improved health and less uncompensated care (Abrams, Nuzum, Mika, & Lawlor, 2011).
Within the world of health care economics, access to health care services becomes restricted through a fee-for-service model that authorizes third-party payers to prioritize reimbursements for the delivery of acute, episodic treatment over preventative care and wellness. As purchasers, patients have little ability to evaluate the quality of services received or negotiate fair prices. The ACA serves as an advocate, shifting the focus of the health care system from personal health to community health. As part of this initiative, providers receive financial rewards for investing in technological improvements, such as EHR adoption. Through the development of a national HIT infrastructure, capital resource investments enable data capture and sharing. When combined with Meaningful Use incentives, providers receive encouragement to create real-time monitoring solutions to improve health and reduce costs. Together, the ACA offers a path where primary care providers have the means to develop a stronger health care system that provides expanded access, improved quality, and increased wellness.
The United States “for-profit” health care system, conflicted with inflated costs and barriers to access, is in a process of reform. The ACA aims to correct these market failures by reducing costs, improving health, and increasing access to quality care. The change in focus from reducing clinical errors to addressing system performance and community health is an essential aim of the ACA. Through the adoption of HIT, health care providers strengthen their capital resources and increase their ability to deliver quality, cost-effective care. Once adopted, Meaningful Use incentivizes the use of community health data to establish real-time monitoring programs that detect the need for medical intervention.
The ACA offers several economic initiatives to encourage providers to evolve from a for-profit mentality to one focused on health and wellness. The economics behind health care reform will redefine health care demands and the types of services delivered. Over time, the focus on preventative care and wellness will reduce the demand for costly treatments, lowering national health care costs.
Congress of the United States, Congressional Budget Office. (2008). Evidence on the costs and benefits of health information technology (2976). Retrieved from website: http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/91xx/doc9168/05-20-healthit.pdf Impact Advisors. (2012). Meaningful use stage 2: Understanding
timing and penalties. Retrieved from website: http://www.impact-advisors.com/assets/news/document/ IA_Primer_on_MU_Stage_2_Timing_and_Penalties.pdf
Abrams, M., Nuzum, R., Mika, S., Lawlor, G. (2011). Realizing health reform’s potential. The Commonwealth Fund. Retrieved from http://www.commonwealthfund.org/~/media/Files/ Publications/Issue%20Brief/2011/Jan/1466_Abrams_how_ACA_will_strengthen_primary_care_reform_brief_v3.pdf